Wagner-Keynesian Nexus in a DSGE Model

Shiou-Yen Chu () and Brian Chi-ang Lin ()
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Shiou-Yen Chu: Associate Professor, Department of Public Finance, National Chengchi University
Brian Chi-ang Lin: Professor, Department of Public Finance, National Chengchi University

Economics Bulletin, 2021, vol. 41, issue 4, 2725-2735

Abstract: This research integrates two longstanding controversies, Wagner's law and Keynesian hypothesis, into a dynamic stochastic general equilibrium (DSGE) model. The former perceives that government spending endogenously varies with output growth, while the latter considers that government spending exogenously triggers economic growth. We show that these two standpoints will gradually coincide as private consumption and public expenditure become more substitutable.

Keywords: Government spending; Wagner's law; Nominal rigidity (search for similar items in EconPapers)
JEL-codes: E6 H3 (search for similar items in EconPapers)
Date: 2021-12-29
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Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-21-00253

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